Germany's Schroeder set to make way for 1st woman chancellor
(AFP)
Updated: 2005-10-10 11:26

German Chancellor Gerhard Schroeder appeared on the brink of releasing his seven-year hold on power and stepping down to allow conservative leader Angela Merkel to become Germany's first woman chancellor.

There was intense speculation that a final meeting between Schroeder and Merkel at 11:00 am (0900 GMT) would cement a deal which would see her lead a "grand coalition" government stretching across right-left party lines.

The rivals met on Sunday to thrash out a compromise, exactly three weeks after Merkel's centre-right Christian Democrat alliance finished just four seats ahead of Schroeder's Social Democrats in an inconclusive general election which failed to produce a governing majority.

Having vowed on election night that his party would never serve in a government under Merkel's control, Schroeder appears to have changed his mind and abandoned his hopes of a third term in power, reports said.

But the Christian Democrats may have to pay a heavy price for the right to have Merkel as chancellor.

One report in Focus magazine at the weekend said the Social Democrats would have two extra cabinet posts, taking eight ministries to six for the Christian Democrats.

Both parties declined to officially comment on such speculation and the leaders maintained their agreed vow of silence after Sunday's discussions.

Yet leading conservative figures said they were concerned Merkel would concede too much in her bid to secure the top job.

"We must be careful that we don't end up with a Social Democrat government with Angela Merkel as chancellor," said Wolfgang Bosbach, who heads the parliamentary party of Merkel's Christian Democratic Union (CDU).

The Social Democrats' party chief Franz Muentefering, who also took part in Sunday's meeting, said before the talks that both sides would put the outcome to their party leadership on Monday morning before the rivals for the chancellery held their final face-to-face meeting.

"We will not know until midday tomorrow whether we can have negotiations (on the coalition government)," Muentefering said.

If Schroeder, 61, does step aside, much attention will be focused on whether he accepts a cabinet post or quits politics.

Having reportedly initially rejected the offer of working under Merkel as "an insult", Social Democrat sources have said Schroeder was warming to the idea of a major post such as foreign minister or vice-chancellor.

The party leaders have warned that even if a deal is announced on Monday, formal coalition negotiations may not be completed for several weeks.

German industry has urged the politicians to strike a deal and get on with urgently needed reform of the economy.

The once mighty German economy is struggling under the weight of unemployment running above 11 percent.

Merkel campaigned on a promise to slash unemployment with a new package of measures, but she may be forced to continue implementing Schroeder's controversial labour market reforms.